What down payment amount lenders will accept
The minimum down payment depends on the type of loan you're getting and the lender's rules. Conventional loans typically require 3% to 20% of the home's purchase price. FHA loans allow as little as 3.5%. VA loans and USDA loans can require 0% down if you meet their may be able to access criteria. Some lenders will accept less than 3% on conventional loans, but this is less common and usually comes with higher interest rates or additional fees.
The amount you put down directly affects your monthly payment and the total cost of the loan. A larger down payment means you borrow less money, which lowers your monthly mortgage payment and the interest you pay over the life of the loan. A smaller down payment means a higher monthly payment and more interest paid overall.
Your credit score, income, and debt also influence what down payment amount a lender will accept. If your credit score is lower or your debt-to-income ratio is high, some lenders may require a larger down payment to offset the perceived risk. Others may decline to lend to you at all, regardless of down payment size.
Key Takeaways
- Conventional loans require 3% to 20% down, FHA loans require 3.5% down, and VA or USDA loans may require 0% down depending on your may be able to access.
- A down payment of less than 20% on a conventional loan triggers mortgage insurance, which adds to your monthly payment until you reach 20% equity.
- The actual dollar amount you need depends on the home price—a 5% down payment on a $300,000 home is $15,000, but on a $500,000 home it is $25,000.
- Your credit score, income, and existing debt affect whether a lender will accept your down payment amount and what interest rate they offer.
- Closing costs (typically 2% to 5% of the home price) are separate from your down payment and must be paid at signing.
Calculating the dollar amount for your target home price
To find your down payment in dollars, multiply the home's purchase price by the percentage you plan to put down. If you are buying a $350,000 home and putting down 10%, your down payment is $35,000. If the home costs $250,000 and you put down 5%, your down payment is $12,500.
Many first-time buyers aim for 5% to 10% down because it is lower than the traditional 20% but still keeps monthly payments manageable. A 5% down payment is easier to save for than 20%, but it triggers mortgage insurance. A 10% down payment is a middle ground that reduces the insurance cost and lowers your monthly payment compared to 5% down.
Use this formula to estimate what you need: (Home Price) × (Down Payment Percentage) = Down Payment Amount. Then add 2% to 5% of the home price for closing costs, which you will also need to pay at signing. These are separate from your down payment and are often not rolled into the loan.
What mortgage insurance is and when you pay it
Mortgage insurance (called PMI on conventional loans, MIP on FHA loans) is a monthly fee added to your mortgage payment when you put down less than 20%. It protects the lender if you stop paying, but you pay for it. On a conventional loan with 10% down, mortgage insurance typically costs 0.5% to 1% of the loan amount per year, divided into monthly payments.
On an FHA loan, mortgage insurance is mandatory regardless of down payment size. You pay an upfront mortgage insurance premium (usually 1.75% of the loan amount) at closing, and then a monthly premium for the life of the loan or until you reach a certain equity threshold, depending on your down payment amount.
You can remove PMI from a conventional loan once you reach 20% equity in the home—either by paying down the principal or by the home appreciating in value. You must request the removal; most lenders will not do it automatically. MIP on FHA loans is harder to remove and often stays for the life of the loan if you put down less than 10%.
Saving strategies if you do not have the full amount yet
If you cannot save 20% down, you have several options. You can put down 3% to 10% and accept mortgage insurance as part of your monthly payment. You can look into down payment assistance programs run by your state, county, or city—these are grants or forgivable loans that help cover part or all of your down payment. You can ask family members for a gift (some lenders allow down payment gifts with no repayment required).
Some employers offer down payment assistance as an employee benefit, particularly in high-cost areas. Credit unions sometimes have lower down payment requirements than traditional banks. You can also explore first-time homebuyer programs specific to your state, which may offer lower rates, reduced down payments, or both.
Saving aggressively for a few more months or years to reach 10% or 15% down will lower your mortgage insurance costs significantly compared to 3% or 5% down. The difference in total interest paid over 30 years can be substantial.
How down payment size affects your monthly payment and total cost
A larger down payment lowers your monthly mortgage payment because you are borrowing less money. On a $300,000 home at 7% interest over 30 years, putting down 5% ($15,000) means borrowing $285,000, with a monthly payment around $1,897 plus mortgage insurance. Putting down 20% ($60,000) means borrowing $240,000, with a monthly payment around $1,596 with no mortgage insurance. The difference is roughly $300 per month.
Over 30 years, that $300 monthly difference adds up to $108,000 in total payments. Add in the cost of mortgage insurance on the 5% down scenario (roughly $150 to $300 per month for several years), and the total cost difference becomes even larger. This is why financial advisors often recommend saving for a larger down payment if you can afford to wait.
However, if you are renting and paying rent that equals or exceeds what a mortgage payment would be, waiting years to save 20% down may not make financial sense. Buying sooner with a smaller down payment and mortgage insurance might build equity faster than continuing to rent, even with the higher monthly cost.
Down payment requirements for different loan types
| Loan Type | Minimum Down Payment | Mortgage Insurance | Who Can Use It |
|---|---|---|---|
| Conventional | 3% to 5% (some lenders accept less) | Required if under 20% down | Anyone with sufficient credit and income |
| FHA | 3.5% | Always required | First-time and repeat buyers; credit score 580 or higher typically required |
| VA | 0% | Not required | Active military, veterans, and may be able to access surviving spouses |
| USDA | 0% | Required (may provide fee) | Rural property buyers meeting income limits |
What happens if you cannot save enough before buying
If you need to buy before you have saved a large down payment, you have options. You can buy with 3% to 5% down and pay mortgage insurance until you reach 20% equity. You can explore down payment assistance programs in your area, which may cover 5% to 25% of your down payment with no repayment required. You can ask a family member for a gift, which some lenders allow without requiring repayment.
You can also delay buying and continue saving. This is not always the wrong choice—if home prices in your area are rising faster than you can save, waiting may mean you need an even larger down payment in absolute dollars. But if prices are stable or you are paying high rent, buying sooner with a smaller down payment may make sense financially.
Some buyers use a combination of strategies: they save 5% themselves, receive a 5% gift from family, and use a down payment assistance program for another 5%, reaching 15% down without having to save the full amount alone.
Frequently Asked Questions
Can I use a credit card or personal loan to fund my down payment?
Most lenders will not allow this. They typically require that your down payment come from your own savings, a gift from a family member, or a down payment assistance program. Using borrowed money (other than the mortgage itself) signals financial risk to the lender. If you do use borrowed funds, you must disclose this to your lender, and it may disqualify you or raise your interest rate.
What if I have 10% saved but the lender requires 15%?
You can shop around—different lenders have different minimum down payment requirements. You can also ask the lender whether a co-signer, a larger credit score, or a lower-priced home would change their requirement. Some lenders will accept 10% if your credit score is higher or your debt-to-income ratio is lower. You may also explore FHA loans, which require only 3.5% down.
Does my down payment have to come from a savings account?
Most lenders require that you show the money has been in your account for at least two months (called "seasoning"). This prevents you from borrowing money, depositing it, and claiming it as savings. Gifts from family are allowed, but you typically need a signed letter from the family member stating it is a gift and does not need to be repaid. Down payment assistance programs provide funds that count as your down payment.
If I put down 3%, can I remove the mortgage insurance after a few years?
On a conventional loan, yes—once you reach 20% equity through paying down the principal or home appreciation, you can request PMI removal. On an FHA loan, it is more complicated. If you put down less than 10%, the mortgage insurance typically stays for the life of the loan. If you put down 10% or more, you can remove it after 11 years of payments.
What if the home appraises for less than the purchase price?
If the appraisal comes in lower than the agreed purchase price, your down payment percentage increases automatically. If you agreed to buy a $300,000 home with 10% down ($30,000) but it appraises at $280,000, you are now putting down 10.7% of the actual value. You may need to bring additional cash to closing, renegotiate the price, or walk away from the deal depending on your contract terms.